Sunday, July 03, 2011

Doing Politics Differently? Let's see................

Well - I hadn't realised just how long it is since I blogged! However, this is such an important issue that I have torn myself away from a beautiful white sandy beach in order to mount a last minute attempt to garner support from our MPs for an amendment to tomorrow's Finance Bill - the text of my email below :-


Dear All

I am sure you will remember the emergency banking motion that was passed at conference, in particular calling for:

F) Measures to tackle financial exclusion for individuals and small business, with a Basic Banking Guarantee; a public bank administered through Post Offices; a commitment from high street banks to provide fee-free ATMs within walking distance of all deprived communities; as well as reducing unfair bank, credit card and loan charges.

G) Greater support for local credit unions and mutuals.

(my emphasis)

So you can imagine my dismay when it came to my attention that our party may not support an opposition amendment to the finance bill on Monday which offers an eminently sensible way forward without making any firm commitments - as you will see from the text below:


The Government shall lay before Parliament a review of all taxation measures contained in this Act that are applicable to those judged by the financial services authority (or its successor body) to engage in high cost credit lending. This review shall consider the following matters:
a) The nature of the high cost credit market and the proliferation of lending practices which are detrimental to consumers and or competition in the provision of credit to consumers;
b) The impact that taxation could have on the provision of high cost credit in the UK which is detrimental to consumers and or competition in the provision of credit to consumers;
c) Whether changes to taxation could discourage lending in a manner which is detrimental to consumers and or undermines competition in the provision of credit to consumers;
d) Other measures relevant to the high-cost credit lending sector that may prevent consumer detriment.


There are two clear issues for me - firstly - the preamble to our constitution which clearly states that “no-one should be enslaved by poverty”. As a party we seem to be continually flying in the face of that aspiration and getting to grips with legal loan sharks seems to me the least we could do. In fact not only would there be no cost to the public purse in doing so, ultimately it could cost the state less as fewer people would be dealing with the consequences of unmanageable debt - in particular the impact it has on both mental health and relationships (and as I understand it the Tories are very keen on preventing family breakdown - debt being one of the key issues). There is surely a clear and present need, given the disproportionate impact of the recession and “austerity measures” on the poorest in our society - to do what we can through regulation, to protect them. As some of you will know my day job is working for the Money Advice Service (formerly part of the FSA) so I am acutely aware of the need for preventative measures, such as education and advice as well as access to free ATMs, Basic Bank Accounts and reasonable credit as provided by credit unions. However, these are not the whole answer, the fact is that most people only seek advice once they have a problem. I understand the arguments about regulation forcing people into the arms of illegal loan sharks, however, there is no evidence for or against this and surely this is not an argument against the above amendment which calls only for a review.

Secondly, I have a real concern that to reject this amendment flies in the face of all we have been saying about a new kind of politics, why is consensus such a problem? Surely we agree with the sentiments of this amendment, it is in line with party policy, so to reject it merely because it is an opposition amendment risks us being portrayed as mealy mouthed opportunists - caring more about party politics than the people I know we all got into politics to speak up for, those people whose lives are constantly blighted by these ruthless money lenders.

I am presuming there is a strong whip on Monday - but I fear that rejecting this amendment will prove to be yet another indication of just how disconnected the parliamentary party is becoming from the grass roots of the party, who will not understand why we can’t support amendments that are in line with party policy and are not ruled out or in by the Coalition Agreement. In my humble opinion, if we lose our integrity we risk losing our soul.

Anyways, I have said my piece for what it’s worth! I appreciate how difficult it is for all of you at the moment, in particular being continually faced with having to choose between holding your collective noses and voting for things you don’t believe in, or risking upsetting valued colleagues by defying the Coalition position - but I hope on this issue you will feel able to take a stand.

With best wishes

Linda

2 comments:

Andrew_F_Smith said...

This worries me. Not the LibDem policies quoted, which seem absolutely right, but the idea that the proposed changes will help financially disenfranchised people.

Making high cost credit more expensive to provide will either make rates even higher or squeeze supply. I doubt it will do anything to demand - because there is absolutely no where else these people can get credit from.

It's also wrong to assume credit unions can fill the gap, because there aren't anywhere near enough of them and they don't want to lend to this market - it's too risky. Joseph Rowntree research has shown they would need to charge similar rates.

Real solution - an Act, like the one the US have had since 77, that requires mainstream lenders to take the high risk with the low.

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